Tax planning has long been a staple of wealth management. Tax preparation, however — the grunt work of gathering W-2s, chasing down receipts and deductions — has traditionally been treated like the broccoli of the business: it has its benefits, but it’s not always appealing and often avoided.

Yet a handful of Registered Investment Advisors (RIAs) have discovered that tax prep can be a secret weapon for boosting organic growth, attracting new talent and gaining the attention of next-gen clients.

“We knew at the outset that we needed to create an organic growth hub to drive client growth and to attract and retain the talent required to scale our business,” says Jason Gordo, President and Cofounder of Modern Wealth Management and a member of Capital Group’s RIA Advisory Board. 

“We also saw how valuable tax planning and prep was to the clients we work with. Adding tax services absolutely drives client growth and satisfaction.”

Is it a smart move for your firm? There are reasons why only 15% of $1b-plus RIAs go to the trouble of creating an in-house accounting business.¹

Gordo and two other board members — Lisa Crafford, Managing Director and Head of Advisory at Constellation Wealth Capital, and Cliff Hodge, Chief Investment Officer and partner at Cornerstone Wealth Group — examine the good, the bad and the ugly of doing clients’ tax returns.

The good: Tax prep can help drive organic growth

At a time when organic growth is, at best, in the low single digits across the industry,²  Modern Wealth Management’s client acquisition growth rates have nearly reached double digits at certain times.³

The firm has grown to $11B in assets under management (AUM) in a little more than two years, Gordo says. Most of that reflects an aggressive mergers and acquisitions strategy, but also a steady stream of prospects drawn in by a state-of-the-art digital marketing operation using financial planning and holistic tax planning services, including tax prep, as the hook.

Modern Wealth has acquired four firms with in-house tax practices, and its 30-person tax team filed 2,200 returns during the 2025 tax season.

Its dedicated organic growth concierge team works in shifts and on weekends, pulling “people of interest,” lured by holistic tax services into the top of the digital marketing funnel. The speed at which concierge members grab a person of interest and warm them into a prospect is crucial, says Gordo — and why Modern Wealth brought tax planning and prep in-house.

Once a concierge member has made contact and warmed a person of interest into a prospect, they pair them with a suitable advisor. The advisor is handed an AI-driven dossier on the prospect’s financial life and prepares a directionally accurate financial plan for the first meeting. 

The differentiating factor is the speedy alignment of in-house accountants, investment specialists and financial planners on tax and wealth management strategy for the prospect — before, during and after the meeting.

“There is an absolute increase in the client conversion rate when you engage in a real way with tax,” Gordo says. “Having an accountant, an investment specialist and a financial advisor is a very powerful combination of professionals to put in the same room with the client.”

Modern Wealth has also targeted a core client group in the $1M–$10M segment — people who haven’t always optimized their taxes by pulling all planning, income and investment levers in unison. “It has been estimated that 85% of prospects are overpaying taxes on their retirement income distribution,” says Gordo. 

The good: Tax prep can provide an elevated client experience

Adding tax prep would seem to be a positive move for other advisors and RIAs, considering the increasing difficulties clients face when doing their taxes. Some 300,000 CPAs have quit in recent years,⁴ and the accounting industry is struggling to increase graduate numbers.⁵

To get effective tax savings, high net worth clients are often faced with the ordeal of separate meetings with estate attorneys, investment advisors and CPAs.

Offering tax-prep services to clients can significantly elevate their experience with an RIA and potentially improve the overall tax outcome, says Cliff Hodge at Cornerstone Wealth. “In the financial services industry, it’s common for the right hand not to know what the left hand is doing: Your CPA may be pursuing one strategy for your tax plan, while your financial planner and estate attorney are headed in a different direction. Only a fully integrated firm, one that oversees all aspects of a client’s financial life, can truly connect the dots.”

Cornerstone, a $3B RIA providing family office-style white-glove service to wealthy and ultra-wealthy clients, brought tax prep in-house to have complete control over the client experience.

“Our mission is to be the quarterback in our clients’ financial lives,” says Hodge. “There is tremendous value in overseeing the entire financial ecosystem. When clients see how all the tax components integrate into a single, cohesive strategy, the impact can be tremendous. But it has to be executed well — and many don’t get it right.”

Cornerstone did over 700 tax returns in 2025 and specializes in corporate tax services, a more lucrative part of the tax prep business.

The good: Tax prep as a bridge to next-gen clients

David Brouchard, whose firm RGB Financial is a division of LPL in Farmington, Connecticut, also provides tax prep in-house, filing about 550 returns each year for clients. He says tax prep not only helps them know everything about their clients, it also provides an easy bridge to transition the next generation of existing clients into the firm.

Rather than having senior advisors serve the younger generation, Brouchard pairs the adult children of wealthy clients with junior advisors for basic planning needs and tax prep.

“Doing the kids’ tax returns helps. They know us because they talk about us at the dinner table,” says Brouchard.

The bad: Tax prep is a heavy lift

Growing RIAs with $1B or more in assets are rapidly increasing their services to meet the demands of younger wealthy clients. Yet despite the benefits of doing tax prep, it’s still one of the least favored ancillary services to bring in-house, according to research by Cerulli Associates.⁶

Why the disconnect? “It’s expensive and complicated to do if you decide to bring tax prep in-house; third-party referral systems are often disappointing and accountants and advisors are entirely different people,” says Lisa Crafford at Constellation Wealth Capital.

Most RIAs use some form of outsourcing, ranging from loose arrangements with accountants in their centers of influence (COI) cohort to documented reciprocal arrangements with accounting firms.

Yet, aside from some well-developed third-party agreements, Crafford thinks RIAs can only truly cross-sell wealth services with accountants when they are all under one roof, working together regularly and developing trust.

“The nature of accounting work is not really conducive to driving referrals,” says Crafford. “Accountants tend to have a transactional relationship with a client. It’s very hard to retrain someone who is not in your firm to think relationally and automatically about referrals when the nature of their work has been transactional.”

The in-house model is too expensive for small and mid-sized firms to contemplate, she adds. “I have seen some mid-sized RIAs make formal, documented referral agreements work, but the most successful are those where advisors and accountants work together regularly and have a rapport and trust. Accountants won’t refer clients if they don’t trust the advisor to provide their clients with the right advice.”

Cornerstone Wealth used the referral system as it tried to find the perfect CPA business to acquire. “The referral system is a good option for those firms who don’t have the scale, resources and operations to bring it in-house,” says Hodge. “It’s a good way to dip your toe in, to get to know the business and the personalities involved.”

The ugly: Your firm may need to adapt to fit tax prep

Developing a tax service was a multi-year process for Cornerstone. The firm evaluated a number of potential partners and passed on some opportunities before finding the right partnership. 

“Cornerstone has a very strong collaborative culture, which is core to who we are and which we must always defend: full stop,” says Hodge. "The key question we asked ourselves and then ultimately answered is: Do we want to just be an aggregator and bolt on a tax practice? Or do we want to be integrators, and create a truly comprehensive model where financial planning, investment management and tax preparation are all central to the value proposition for our clients? Strategically we prioritized the integrated approach, which is much more of an intensive process.”

Cornerstone finally found the perfect partnership and brought in a CPA and her business clients — but only after a test run in a referral arrangement and a year of conversations.

“Whoever is thinking about doing this has to look very hard at the culture of the CPA firm or person, their background and how they want to operate in the RIA,” says Hodge. “I can’t stress enough how important it is to find the right fit. You’re bringing on an executive, not an advisor, and you’re merging two very different businesses, with neither party knowing how to manage the other side.”

Revenue and equity sharing often become sticking points in merger talks, Crafford explains. “Tax work trades at different multiples and valuations, and because it tends to be seasonal, it can potentially hurt your profitability margin.”

Problems also arise when CPAs and advisors partner early in a firm’s growth. “An RIA can grow much faster than a tax practice. If that’s not addressed upfront, the tax partner might end up with the same equity weighting as a much more profitable RIA,” Crafford says.

The ugly: Operational headaches

Managing the headcount and developing operational support for the tax business can be costly. “The only thing the advisory and tax businesses have in common is the client,” Hodge says. “The tech, back-end systems and operational staff on the accounting side were all foreign to us.”

Seasonality adds another challenge, according to Crafford. “You have to cross-train your operational staff to support the advisory and tax businesses, or you’re hiring and firing groups of people every year to manage the tax season workload.” 

Final take

Bringing tax prep in-house isn’t for the faint of heart. It’s operationally demanding, culturally complex and often financially marginal. But for RIAs with the right strategy, it can drive organic growth and deepen client relationships.

Most importantly, having all of their financial needs handled by one firm is what the next generation of wealthy clients wants, says Crafford.

“The transfer of wealth is forcing RIAs to rethink their business strategy and long-term vision,” she says. 

“Advisory firms should be very thoughtful about whether they’re going to serve the next generation — and how they do that in a cost-effective way.”